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Falling hotel occupancy keeps room rates in check

Average room rates fell in Liverpool, Newcastle and Aberdeen, and remained static in London and Glasgow, says HVS

Pictured: the HVS Hotel Bulletin analysed hotel performance in 12 UK cities

The average price of a hotel room in Liverpool, Newcastle and Aberdeen fell in the second quarter of 2016, while London and Glasgow prices remained static, according to the latest HVS Hotel Bulletin.

In year-on-year figures for the three months to the end of June, rates fell 1 per cent in Liverpool,  3 per cent in Newcastle as increased supply becomes available, and by 25 per cent in Aberdeen, where the oil price crash continues to be acutely felt.

Of the 12 cities analysed in the report, Birmingham recorded the steepest rate increases for the three month period, up by 10 per cent on 2015, driven by a 6 per cent increase in occupancy. Average rates in Manchester also soared, by 9 per cent, despite a 2 point decline in demand, while Bath experienced increases of 8 per cent and Edinburgh and Leeds both saw rates go up by 7 per cent. Belfast was the other city to note an increase in rates, up by 3 per cent, despite occupancy falling by the same figure. 

London recorded a sixth consecutive quarter of year-on-year declines in occupancy figures, slipping by 3 per cent, while rates failed to increase for the second consecutive quarter, according to report authors. Economic concerns over the EU Referendum vote and a decline in international visitors due to global terror activity were contributing factors, said HVS chairman Russell Kett.

“While this is significant in the short term, London is, and will remain, a huge magnet for inbound tourism,” Kett said. “The Brexit decision is having the double-impact of weaker sterling and a reduction in anticipated economic growth. This is both good, and bad, news for the sector in that Britain becomes a cheaper destination for overseas visitors, dampening outgoing UK travel but potentially increasing the F&B costs as some suppliers pass on price rises.”
Birmingham's burgeoning occupancy levels were highlighted in a separate report from Marketing Birmingham, which said the city had achieved its best occupancy results for spring since records began in 2003. Between March and May 2016, the report said occupancy hit an average 75 per cent, up from 74 per cent in 2015 and 71 per cent in 2014.
Emma Gray, director of marketing and communications at Meet Birmingham, said: "While a host of new brands have recently chosen to launch in Birmingham, there are a further 14 hotels - amounting to more than 2,000 bedrooms - in the pipeline, demonstrating the confidence that investors currently hold in Birmingham's visitor economy and tourism offer."

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